#669 Bitcoin Solves Inflation w/ Dylan LeClair

Dylan LeClair is the Head of Market Research at Bitcoin Magazine. In this conversation, we discuss bitcoin, central banks, inflation, negative yielding debt, portfolio construction of a 20 year old, dropping out of college, energy value, bitcoin hash rate, and illiquid supply. ======================= With 10M+ users, Crypto.com is the easiest place to buy, and sell 100+ cryptocurrencies. The Crypto.com Visa Card gives you up to 8% back instantly, and 100% back on Spotify and Netflix. Also, Crypto.com lets you earn up to 8.5% p.a. on BTC, and 14% p.a. on stablecoins. Get $25 when you download the Crypto.com App with code "pomp". Download the App now: http://www.crypto.com =======================

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Dylan Leclerc is the Head of Market Research at Bitcoin Magazine. In this conversation, we discuss Bitcoin, central banks, inflation, negative yielding debt, portfolio construction of a 20-year-old, dropping out of college, energy value of Bitcoin, the Bitcoin hash rate, and the illiquid supply. I really enjoyed this conversation with Dylan, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is Crypto.com. Crypto.com is helping mainstream the crypto industry by signing major global partnerships with multiple sports, including Serie A, the

• 0:43Anthony Pompliano?

  Italian Football League, the UFC, and my personal favorite, Formula One. They also recently announced a brand-new sponsorship with the Philadelphia 76ers as the Jersey Patch sponsor. They've got over 10 million users around the world. Crypto.com offers an easy way to buy and sell more than 100 cryptocurrencies. You can even buy Bitcoin with as little as $1. New users enjoy all sites of great advantageous features, everything from 0% debit card fees in their first 30 days to high-yield interest rates. Crypto.com also is Visa's biggest crypto card partner. My listeners across North America, Europe, and most of APAC can apply for the slick metal card offering up to 8% back on most purchases. And it comes with amazing perks like 100% rebate on Netflix, Spotify, and

• 1:27Anthony Pompliano?

  Amazon Prime. You'll get $25 when you download the Crypto.com app today and use the code Pomp. Again, 25 bucks for free after you download the Crypto.com app today and use code Pomp. Go check them out in the App Store or click on the link in the description and download it today. All right, let's get into this episode with Dylan. I hope you guys enjoy this one.

• 1:46Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes.

• 2:08Anthony Pompliano?

  What's going on, man?

• 2:10Speaker 02

  How's it going, guys? Thanks for having me on.

• 2:12Anthony Pompliano?

  Of course. All right, let's start off first, just kind of introducing you to everyone. You work at Bitcoin Magazine. Explain a little bit about what you do there and kind of what you're personally interested in terms of Bitcoin and macro environment.

• 2:22Speaker 02

  Yeah, so I work at Bitcoin Magazine and I lead off their premium markets product. So we cover, it's called the Deep Dive, and we cover global macroeconomics, on-chain analytics, and Bitcoin derivative markets. And really just kind of combining like the day-to-day, week-to-week, month-to-month moves in the Bitcoin markets, or just financial markets more broadly. You know, and combine that with this, you know, 10-year, or like really this, this kind of monetization process of Bitcoin. And combining, you know, both of those views, like keeping that, that sort of, you know, zoomed out view, as well as just kind of giving some context, you know, about what's happening and why.

• 2:59Anthony Pompliano?

  Yeah, and I think that's part of what is so fascinating about the way that you cover this, is you always keep the macro environment in mind as you look at the Bitcoin market. So we've got a bunch of charts that we're going to run through here. Let's start first with the major central banks' total assets as they continue to rise. And help us understand just kind of contextually, like, why is this chart important and what does it really tell you as you look at it?

• 3:19Speaker 02

  Yeah, so, I mean, there's, there's a couple of things, like, one, we have this, this new technology, right? We have Bitcoin. And, and so many people are trying to figure this out, and there's a lot of noise in like the so-called, you know, crypto space, right? We, we all know this, but, but really, I think what's happening and what's forcing people to adopt this technology, this monetary technology, is we're, we're kind of at the end of this long-term debt cycle. And most people don't really understand this, especially if they're, you know, not studying macroeconomics, or, you know, have a, have a, like, in-depth, you know, history of, of monetary assets and debt cycles, right? But, you know, starting in 08 and in 2020, we kind of hit the zero lower bound. And so central banks kind of ran out of their, their, you know, main option, firepower, which is interest rate policy.

• 4:03Speaker 02

  And so, you know, what they went to is quantitative easing. It's essentially just stuffing a bunch of cash in the bond market, or really, I mean, simplified as printing money, right? But it's really just, just lowering the discount rate of, of, or the cost of capital everywhere on the planet. And so these are all, you know, the global major central banks. And what this is just showing is that they're, they're trying to keep the system glued together. But it's, it's, you know, it's, it's cracking, it's cracking at the seams. And so this is, you know, actively forcing people into Bitcoin, or to see. Seek shelter elsewhere.

• 4:35Anthony Pompliano?

  And so when we look at the total assets, obviously, every major central bank just absolutely took off in 2020 for obvious reasons. But also in the United States, we've got this debt chart that shows a very similar type of growth there at the end in 2020. So explain what's going on here.

• 4:51Speaker 02

  Yeah, so this is looking at just like total debt to GDP, non-financial, financial. And right now, total debt to GDP is at 400%. And so my good buddy Greg Foss, he was on your show. He likes to always talk about how it's a mathematical certainty that fiat will debase because of basically this chart. With debt to GDP at 400%, given that all debt has to be repaid plus interest. Unless the economy is growing at 12, 15% a year in real terms, then then we're in a debt spiral. And there's really no way out unless it's default, which is politically not feasible, or to basically debase the currency. And so that's what that's, you know, that's the game we're playing. And really, a lot of people get

• 5:33Speaker 02

  you know, get upset with the puppets of the game, but it's more systematic than that. It's not about Trump or Biden or Powell or whoever you you want to, you know, call shots at. And I get it. I do it too sometimes. But it's really, it's systematic. We're in a debt spiral and mathematically, there's no way out of this. Except to continue printing and attempting to kick the can down the road. But more and more people are waking up and saying, I don't want to play this game.

• 5:57Anthony Pompliano?

  Yeah, I think that's a great way to describe it. We've got a chart here of the real 10-year Treasury bond yield. Describe what's going on with the 10-year yield, but also what the relationship between the 10-year yield and inflation is.

• 6:08Speaker 02

  Yeah, so the Fed or like the government's way of measuring inflation, I believe, is kind of flawed. And I think most people that are paying attention do as well. But just for the sake of the argument, we'll use it. It's, you know, there's PCE or CPI, but it's basically just consumer price inflation. And we're indexing that against what a, you know, a Treasury bond could get you, what a lot of people in financial markets, you know, they use as their risk-free rate. Then what you're looking at is essentially in this chart, when you break that zero lower bound, the cost of capital is negative, right? So when you're evaluating stocks, real estate, any asset.

• 6:43Speaker 02

  When the cost of capital is negative, how, what's the fair value? And the answer is, uh, it doesn't compute. It breaks. Um, so if you're holding a bond or if you're sitting on a, you know, a sixty forty portfolio, if you're, you know, in your pension or your, your 401k, you're, you're losing, uh, in real terms. And even if nominally you're, you're making out okay, um, you're, you're basically getting pillaged if you're, if you're holding bonds or a lot of these financial assets because the cost of capital is, is so distorted. And that's because it's a, it's a centrally planned market. And so, uh, I think these are like the, the broad macro trends here. Um, and this is why, you know, I think Bitcoin would be important regardless. Um, and, and, you know, Satoshi literally, uh, released Bitcoin because of, of these problems. I think he, he chose to release Bitcoin kind of strategically.

• 7:27Speaker 02

  Uh, but, um, this is why Bitcoin is, is especially so important.

• 7:31Anthony Pompliano?

  And when we look at this idea of global aggregate negative yielding debt, uh, it just is, is nuts, right? Uh, to see that now there's about fourteen trillion dollars total of this. How does this fit into the macro picture?

• 7:43Speaker 02

  Yeah, so this is kind of similar to the past charts, but basically, you know, a lot of people like to call Bitcoin a bubble. It's, I think it's about nine hundred billion today in total market cap. Uh, but just for context, there's, there's fourteen trillion dollars, or I think this was from last month, but around fourteen, fifteen trillion dollars of debt today that is guaranteed to lose money. It's people signing up, uh, giving a hundred dollars, uh, to receive ninety-nine back. Um, you know, that's simplified, but essentially that's what's going on. There's fourteen trillion dollars, uh, into that, in that bucket. So, uh, when you, when you're calling Bitcoin a bubble, um, this, this new global monetary asset that no one can mess with, um, I think, I think you really need some context here about just how, how big of an everything bubble there is.

• 8:26Speaker 02

  Um, and this, this great monetary experiment that central banks are conducting, um, with global fiat currencies everywhere. We've, we've never seen anything like it. Um, you know, Bitcoin at nine hundred billion is, is an absolute drop in the bucket. And so, you know, like, think about fourteen trillion dollars. It's, it's something that, you know, a million millions is a trillion. Um, you know, just for some context, like, it's, it's mind boggling. Um, and so, yeah. Bitcoin is extremely cheap.

• 8:52Anthony Pompliano?

  Now, when we think about a potential solution, I think most people who are watching this think Bitcoin could serve as a solution or a part of the solution. And we look at this chart here of Bitcoin hash rate. And you so eloquently put, it's going up forever, Laura. Maybe describe the it's going up forever, Laura joke first, and then we could talk about the chart.

• 9:15Speaker 02

  Yeah, so that's I stole that from Michael Saylor. I had an interview with Laura, I forget her last name, but

• 9:22Anthony Pompliano?

  Laura Sin.

• 9:23Speaker 02

  Talking about the price, Laura Sin, yeah, talking about the price. But in this case, I'm talking about the hash rate. And essentially, you know, for those who are not aware, hash rate is essentially just this, this, you know, Darwinistic, capitalistic competition to mine Bitcoin. And this is in log scale. So if you're looking, you know, at this chart, it's going up in factors of 10, or I'm sorry, 100, no 10. And so, you know, in linear terms, it's, it's, it's looks absolutely ridiculous. It looks like it just, it's hockey sticking up. But what this is showing is that, you know, the competition to sell energy to the Bitcoin network. And, you know, and basically all are mostly wasted energy or underutilized energy, right? This is this free market thing. There's no one being coerced into mining Bitcoin.

• 10:08Speaker 02

  And oftentimes, the energy, the cost is zero or negative, right? Like, these oil producers are literally, you know, they have to pay because they're emitting this methane into the atmosphere. And so Bitcoin mining is a solution to, hey, I'm going to turn this wasted energy into, into global money, global decentralized money. And so, you know, what this is, is you're seeing just this, this new monetary asset born. And the energy cost is what the free market is willing to pay to secure this monetary network. And so, you know, hash rate, it's something that is, it's not something that's like easy to explain to someone that's just, you know, falling down the Bitcoin rabbit hole or the path, but. It's one of the most important aspects.

• 10:50Anthony Pompliano?

  Related to the hash rate is this idea of mining difficulty and kind of this every two weeks, there's an adjustment to the network based on how much computing power is on there. We've got a chart that shows that actual mining difficulty. Describe kind of how you think about this and, you know, is it one of the most beautifully designed technical systems in the world?

• 11:06Speaker 02

  Yeah, so mining difficulty is essentially, you know, as more as the price of Bitcoin rises, or think about any commodity, right? When when a commodity becomes more valuable, gold, oil, copper, silver, there's a larger economic incentive to go produce that thing naturally. That's just that's supply and demand. But with Bitcoin difficulty, there's over two week periods or technically two every 2016 blocks. But, you know, for the sake of this, every two weeks, difficulty adjusts upwards or downwards depending on how much hash rate has fallen or risen. So if the price of Bitcoin is ripping and there's this huge economic incentive to go produce more of it, just like say, say if the price of gold was was increasing, you know, the price of gold doubled.

• 11:50Speaker 02

  Well, all of these people are going to go try to go mine gold. But with Bitcoin, difficulty adjusts to make it incrementally that much harder to produce the thing. And so it's essentially it's the difficulty adjustment continues to kind of ratchet up production costs as more and more energy expenditure and people want to go produce this thing or mine it. And so if you could, I actually arranged the charts in a little bit of a different order. But if you could go down to the the energy cost chart, it's two things down. I think this is one of the most beautiful things. This is this is by Charles Edwards at Capriol Investments. He kind of put an estimate for the Bitcoin energy value using inputs like hash rate and, you know, ASIC estimates.

• 12:34Speaker 02

  But what this shows, right? So if you're just looking at 2021, the price tanked. A bunch of miners were basically, you know, for political reasons, were kicked out of China. And what happened to the energy value? The energy value tanked. Well, difficulty ratcheted downwards multiple times. At one point, there was a third negative 29% difficulty adjustment. And what did that do? It increased the economic incentive to go mine Bitcoin. To go sell your energy to the Bitcoin network.

• 13:00Anthony Pompliano?

  So in this chart, walk us through real quick what everyone's looking at here. So what the green, the blue and the red, what exactly are they looking at so that everyone can make sure they're paying attention?

• 13:09Speaker 02

  Yeah, so the green is the hash rate, that's above. And the blue is the Bitcoin price, right? And so the red is using various inputs such as hash rate as well as some assumptions. But it's basically giving you a production cost, how much miners are basically paying for every one Bitcoin to produce one Bitcoin. And so right now, that's about 24,000. In May, that was about 14,000. But say tomorrow, the price of Bitcoin tanks, minus 50% like happened in March of 2021 or March of 2020. There's this huge liquidity crisis. Now, all of a sudden, it's not economical to mine Bitcoin. Well, what happens miners unplug, hash rate plummets.

• 13:49Speaker 02

  Well, two weeks from now, difficulty is going to downwards adjust and it's going to incentivize all of these miners to come back and secure the network and to mine Bitcoin again. And it's going to lower that production cost and it's going to limit that sell pressure on the market. And so it's just kind of this beautiful, almost like it's an engineering discovery almost, I would say, not even an invention. Satoshi discovered Bitcoin as this decentralized monetary network that runs just on economic incentives and nothing else. And it's, when you dig into it, it's one of the most beautiful engineering machines ever.

• 14:22Anthony Pompliano?

  So when we go and we look at this chart around the liquid and illiquid supply, we've had Will, I know you and Will are very close and talk almost daily from what I understand. We've had him talking a bunch about this illiquid supply and the supply shocks. The chart that you've got here around the liquid and illiquid supply, explain kind of how you look at this and what are you looking for in the chart as you look at it on a daily basis?

• 14:42Speaker 02

  Yeah, so most of these charts are kind of covering broad trends. So this is the Bitcoin liquid and illiquid supply. And so the total supply of Bitcoin is, I think it's like 18.8 trillion. But over time, what you see is an increasingly large amount of Bitcoin is becoming illiquid. It's basically being locked away and not hitting the market again. And that free float, despite the issuance kind of increasing, well, or the amount of Bitcoin in circulation increasing while While the issuance on a percentage basis is decreasing, that free float of Bitcoin available to the market continues to kind of to chip away. And especially since market 2020, we've seen, you know, that illiquid supply hockey stick upwards when you're looking at like in a ratio sense. So over time, what's the trend, right? There's manipulated cost of capital globally.

• 15:26Speaker 02

  Everybody and more and more people are kind of waking up to say, hey, this game's rigged and I don't want to play this anymore. And here we have this monetary asset that no one controls, that no one can debase, that no one can manipulate. That is just just on economic incentives, having people adopt it, having institutions adopt it, having nation states adopt it. And so this is just basic supply and demand. There's less and less Bitcoin that are, you know, hitting the market every single day as you have more and more people kind of hoarding this this new asset saying, I don't want to sell for dollars ever. Like I, I don't have an incentive to set to ever sell, right? And I think more and more people like the Michael Sayers of the world, the billionaires of the world, and even just like the average, you know, the average pleb or someone in Nigeria, right? This is the global phenomenon are saying, hey, I just, I just want to store my value in this thing.

• 16:11Speaker 02

  And so, you know, that illiquid supply is just kind of showing, showing this trend and showing really people just waking up to this.

• 16:18Anthony Pompliano?

  When you look at the realized cap versus the market cap, how bullish does this make you feel? When you actually see just the constant long-term trend of appreciation?

• 16:28Speaker 02

  Yeah, so I think realized price is something that I really like to look at because when you're talking about, you know, market cap or or just the price, price can get bad at the margin really easily. But because we have this transparent ledger, right? We have the Bitcoin network, the Bitcoin blockchain has has a ledger of every, you know, every coin in existence and when was the last time it moved, right? So Satoshi's coins were which he mined back in, back in the early days, they never moved. In this metric, they're worth zero and coins that, you know, were acquired in April and haven't moved since are worth about 60,000 per coin. And so we have, you have this realized cap, which is like basically the price paid for every single coin. You can kind of think of it like that.

• 17:07Speaker 02

  And over time, I think, you know, the day-to-day volatility of the BTC USD price, it's volatile and it whips up and down and there's derivatives and all this. But when you're looking at realized price, it's essential. You can, it's like a more pure, you know, view of the monetization process of this network. It's like, hey, the value of every coin, the value of this entire network continues to tick up and up and up and up, and it's basically going up forever. And so, you know, I, I love to look at realized cap as more of like a realized price, like kind of a fair value of Bitcoin. I mean, very rarely do you see the price dip under that.

• 17:41Anthony Pompliano?

  How old are you?

• 17:42Speaker 02

  I'm 20.

• 17:43Anthony Pompliano?

  You're 20. When you think about you and your friends, explain, my brother here is 24, 25, not 25, 25, 25. And we talk a lot about the psychological difference of how 20, 24, 25 year olds think about financial markets than the older generation, even me at 33, I'm kind of in the middle of, of some of those folks. How do you think about equities, bonds, crypto, Bitcoin versus anything else? Like, are you and all of your friends all in on Bitcoin? Or do they have diversified portfolios? Like, how do you guys think through investing?

• 18:20Speaker 02

  Yeah, so, I mean, I had kind of quite the, the orange pill moment, I would say, over the last couple of years. And I've, I think I've gotten most of my friends there as well. But I kind of think of it like, you know, going back to the manipulated cost of capital and legacy finance, that there's just no way that I'm ever going to buy a bond, at least, at least in today's environment. It's just, you know, there's, there's just no way in hell I'm ever gonna fund the US government for 1% a year in nominal terms. When you're thinking about equities, there's also, because of this broken manipulated cost of capital, you're looking at sky high PE ratios, all time high corporate debt to GDP. I just think from a risk reward standpoint, it's not too attractive. And honestly, I, I think, I firmly believe that over the next 10 years, equities will,

• 19:05Speaker 02

  will rip in nominal terms. I think they'll do very well. But when you're, when you're looking at this on a, on a real basis, I think they, they might, they might not do too great, especially when you're, when you're calculating the opportunity costs in Bitcoin terms. Because, I mean, if you, if you couldn't tell, I have kind of, I've come to this conclusion, or I have this thesis that, that the risk rate of everything, the opportunity cost of everything is Bitcoin. And you know, people will say like, are you kidding me? It drew down 50% in a couple of months. Uh, but I'm not thinking on that timeframe. I'm thinking, um, you know, years, decades. And so I know, I know one thing for sure is that, um, the cost of producing Bitcoin will continue to go up forever. Essentially, um, because of the economic incentives and because of, of basically how this protocol works.

• 19:49Speaker 02

  Um, the halvings, the difficulty adjustment, you know, everything we've covered. And so when I think about how do I want to allocate my, my wealth? How do I want to save my time and energy to the future? Um, with Bitcoin priced under a trillion dollars, um, there's basically no other place that I would think about allocating capital at the moment. Um, and I think diversification, um, in, in this sense is, is not something that, that I'm, uh, really too, too interested in. Um, I mean, I, I do own some Bitcoin related equities with a, you know, a few basis points in my portfolio, but for the most part, stacking straight to cold storage and, and you know, that's it because you know, I can handle a 50% drawdown. A volatility at 20 years old is not something I'm, I'm too concerned with. Um, you know, it's a different story for someone that's 65 and, and you know, needs to, needs to, you know, draw from that capital every day.

• 20:34Speaker 02

  But, um, that's just not the case for me. So, you know, stacking sats and, and just chilling.

• 20:39Anthony Pompliano?

  What I think is so fascinating about this is one, I agree with you and, and think that the investment strategy is, uh, is incredibly compelling. Given the macro environment, the asset itself, and then, uh, kind of your age risk profile and, and just your, the long time horizon. Uh, but it's no different than some of the timeless investing advice that others have heard. So like Warren Buffett, for example, talks all the time about if you buy a great asset, the best time to sell is never, right? Just hold it literally forever. Uh, and so, uh, stacking sats may not be the same vernacular that he would use. Uh, a digital decentralized currency may not be the thing he's interested in. But if it ends up in hindsight being a great asset and people buy it and they hold it forever, it's no different than that timeless investment advice that he's been telling his shareholders.

• 21:19Speaker 03

  And kind of the public markets forever, right?

• 21:21Speaker 02

  Yeah, I mean, in a Warren Buffett style approach, like the markets are overpriced. And what I'm what I'm using as my, you know, as my currency or my my savings. So so I'm not investing at the moment. I'm just I'm just simply saving because because, you know, I'll wait for the market to correct. In Bitcoin terms, you know, when looking at everything, look at any chart over the last five years or the last three years. In Bitcoin terms, and I think that's that's the truth. That's what's occurring. And obviously, you're not going to see a 200% compounded annual growth rate of like forever. That's not that's just not sustainable. But I think, you know, Bitcoin is going to see this decade at least 100x, you know, appreciation. Maybe, you know, maybe a little less, maybe a little more, but we're just getting started with this thing.

• 22:05Speaker 02

  You know, in terms of global adoption, if you look at global wealth, it's so it's extremely early. And, you know, I respect people that that can can make it trading in and out every day. But ultimately, that's just something that I, for the most part, stay away from. And I just, you know, I'm going to produce value and I'm going to store that value in what I think is going to protect the best.

• 22:26Speaker 03

  I've got my brother John here with me. John, what questions you got? Yeah, thanks for doing this, Dylan. I love how you talk about you're 20 years old, so you can withstand the volatility and look for that future growth. But a lot of our followers are also similar to you as the younger demographic and everything. Can you talk about your journey to Bitcoin and how you found it? And then how you found your and how you go about working at Bitcoin Magazine?

• 22:48Speaker 02

  Yeah, totally. Honestly, part of my journey was basically like podcasts like this and just like the free education that was available online. You know, I went to college for one year, studied business economics, but I dropped out because I was learning more on Twitter and reading books that people recommended. And so I think for anyone that's kind of interested in this space, but more broadly, you know, in the in the, you know, digital economy. It's you don't need a degree. You don't need like the credentialism of the past. And there's so many ways to just kind of make it out there today on the internet and to learn and to reach out to people. You know, like I learned a lot about Bitcoin from watching the and listening to the Pomp Podcast while I worked a day job, right? So and like, you

• 23:29Speaker 02

  Various other ones, but it was something I stumbled upon Bitcoin late high school while I was just trying to figure out investing. And I just logged on to Twitter and just read what I thought smart people had to say about it. And so that was more valuable for me than listening to my to my Boomer professor over over Zoom call when they sent us home from COVID. So, you know, it was a no brainer for me to like, hey, like, I'm just gonna drop out and and I I just worked a regular job for for like six, six months and, you know, got a DM basically for a for a job opportunity, which was, you know, maybe a stroke of luck, maybe not, but, you know, it turned into something, something that I that I hope will last.

• 24:04Anthony Pompliano?

  Nice. So is it true that Bitcoin made you drop out of college?

• 24:08Speaker 02

  Yeah, I yeah, I for sure. I I mean, I tweeted about it and told my friends and stuff like, hey, like, I'm dropping out and they're like, just to work a job to stack SATs. And they're like, what's SATs? And why are you dropping out? Like, what are you crazy?

• 24:23Speaker 02

  And like, I honestly did it like that. I read I read a couple of books that kind of melted my brain, like, like The Sovereign Individual I read, and then Prices Tomorrow by Jeff Booth, basically like how the internet was basically putting the cost of of education and learning things to zero. And that, you know, the credentialism of the industrial age was was dissipating with the internet. And so for me, I was like, okay, why am I studying finance and economics, learning Keynesian economics stuff I don't believe? Like, they're telling me, hey, inflation's 2%. And I was like, no, it's not. And they're like, yeah, CPI says so. And it was like, that was the answer. I was like, okay, well, I don't think this is too valuable for me. So, yeah, I just, it was something like, all right, I'm gonna drop. This is, and I got a lot of like pushback from it.

• 25:05Speaker 02

  Initially, my parents were a little skeptical, but now they're, I think they're fully orange pilled and they're stacking themselves and and, you know, they agree with my decision now, but it definitely was was not like the traditional path per se.

• 25:16Anthony Pompliano?

  You you may not know that I used to say this. I'm gonna go ahead and say it. I feel like we're safe now. The virus is spreading. That's what happens. It is basically like Bitcoin used to be described as this mind virus, right? Like, once you learn about it, you just can't stop thinking about it. You can't start stop seeing the world in a different way. Then you start to tell people and explain it, and it just spreads through a a group of people in terms of the education and the knowledge. And kind of that that red pill, that orange pill type thing. Talk a little bit about you. You mentioned kind of like not getting the formal education and the Keynesian economics. And I actually think it's a really interesting point that most older people probably don't think from this perspective. But if you go to college and they teach you something that either was

• 25:57Anthony Pompliano?

  true about the world in the past, but no longer is true, or two, is a way to look at the world that you don't agree with in some weird way. Not only are you wasting your time or money, but on top of that, you're actually having information put into your brain that ends up being inaccurate and therefore could be incredibly detrimental. And so dropping out in some weird way is a better way to pursue knowledge than actually staying there and getting that information. Right?

• 26:22Speaker 02

  Yeah, totally. I mean, they were, they were teaching me, they were, they were bringing up, you know, textbooks from I don't even know when the seventies or eighties and they're saying, hey, this is the Phillips curve and this is inflation and this is employment and they have this relationship. And I was like, no, they don't look at the, like, I mean, look at the data. And, and it was like, it was just weird things like that. It was just like, you know, that was anecdotal, but it was like, you know, maybe if I was an engineer or some, or something where I needed to go to school, it would be different. But I was studying like finance and economics and, and I was, I was literally listening to podcasts more than I was, that I was attending in classes and doing homework. And so I was like, all right, screw this. Like, and I dropped out and I literally picked up a manual labor job. It's like, it wasn't too fun, but I listened to, I literally listened to eight hours of Bitcoin podcasts a day for like six, seven

• 27:05Speaker 02

  months. And I got, I think I got the best education in my life. Like it turned into a legit job opportunity. I get to hang on Twitter all day and write about Bitcoin and financial markets. You know, it's, it's something that like, and that's completely self taught over the internet. And like, I'm not, not like bragging or anything. I'm just like trying to say that it's, you know, the cost of a lot of this information and the access to it. And you have some of the smartest people in the world sharing their thoughts for free on these platforms. Like it, that's something that, you know, college, I don't think, I don't think can keep up with, right? Like I was, I was sitting at home and in March, April, May, after they sent everyone home for, for COVID. And I was, I was paying to, to have these boomers on a Zoom call, explain things to me that I knew factually were just incorrect. And so,

• 27:48Speaker 02

  you know, there's, there's, I think this is a gradual change, but I think we're, we're more of like the, at the suddenly point of things for sure.

• 27:54Anthony Pompliano?

  What was going on in the economic or finance classes in college? Like, did they have any clue about Bitcoin? Did you ever ask them about Bitcoin? Were they just dismissive of it? Like, what was going on?

• 28:02Speaker 02

  Yeah, I did. I did ask a couple of guys, a couple of my economics professors. I shared like some, some of the stuff from Plan B, like stock to flow. And I did ask a couple of my computer science professors. I was like, hey, like, what do you think about this? And I got a business call from, from a blockchain company, which, you know, say what you want about blockchain, but I didn't really think they, they understood what was occurring, right? It was like, oh yeah, blockchain technology is very interesting and without realizing that I don't even like blockchain, to be honest. I prefer time chain when, when talking about Bitcoin, like, you know, Satoshi solved the Byzantine's general's problem.

• 28:42Speaker 02

  And so I think like the rabbit hole goes very, very deep with Bitcoin and what it solves and, and how big, you know, the, of a problem Bitcoin solves, it's literally the total addressable market for Bitcoin is the biggest in the world. And so, you know, I don't think any of my professors grasped that. It was something that took me months or years even of, of just like intense, intense studying, intense learning, obsessive learning, right? The virus is literally spreading. And so, yeah, I think that it was something that they didn't really grasp at all, which was just why it was another reason to kind of leave and pursue something else.

• 29:18Anthony Pompliano?

  What do you think about other non Bitcoin crypto assets? Are you interested in any of that? Do you think they have any viability? How do you look at kind of the non Bitcoin part of the industry?

• 29:27Speaker 02

  Yeah, I don't, I don't own any other cryptos. I, and it's not because I'm not willing to look into them. I actually have, have done a lot of research to try to understand Ethereum, you know, any, any other smart contract thing, platform, NFTs. I've, I've, I've done my digging and, and ultimately what I've kind of come to the conclusion of is that proof of work and, and what Satoshi kind of, you know, airdropped on the world. Proof of work basically linked the digital and the physical realm. And it's this zero to one invention. And so, you know, and, and it's the biggest, you know, it solves the biggest problem in the world, uh, which is, which is basically, um, the money's broken. And so, you know, that

• 30:10Speaker 02

  With basically Bitcoin is this the first and only really thermodynamically secured monetary network in the sense that you have this this link of this ledger is essentially proof of of energy expenditure and and it's this immutable thing that nobody can change or alter. And so I think the genie's out of the bottle in that sense and that that's that's something that is extremely compelling for me. Like in terms of crypto, NFTs, if you want to speculate on on all, you know, all these other things, proof of stake, that's great. And I think it's more of like a computer science experiment slash tech startup kind of thing. But I think fundamentally Bitcoin is here and then crypto, anything else is separate, right? And then it's tough because

• 30:55Speaker 02

  there's so much nuance there in terms of decentralization as a spectrum, like, you know, how decentralized is enough, all of these things. But ultimately, I think it's it's clear to me at least, there's Bitcoin and then there's cryptos and whatever else you want to build. And again, like I'm Gary Gensler coming in and saying like, these are securities, like, you know, let the free market do its work. Like, I don't want any of these things to be shut down or killed or whatever. But ultimately, I think, you know, 20 years from now, Bitcoin is a sure bet. And some people might think I'm crazy for saying that. But I think from a game theoretic standpoint, Bitcoin's won. It's already won. But all these other things, you know, build fast and break things, great, like, you know, go ahead, but I'm not interested in in really speculating. I just

• 31:40Speaker 02

  want to save save my value and have it be a sure bet. So.

• 31:44Anthony Pompliano?

  For sure. And then through the end of this year, obviously, I think most of the data that you post on Twitter or talk about shows that we're still in a bull market. What's your kind of price thoughts or price predictions for the end of 2021?

• 31:57Speaker 02

  Yeah, I think, you know, something I'm watching closely is the Evergrande thing. You know, there's been a lot of talk about that recently on Twitter, but there's there's potential for there, you know, kind of be some sort of spillover contagion effects with that. But ultimately, the supply dynamics, I mean, I do talk with Will every day and I'm looking at that same data. It's extremely bullish, like, you know, the most bullish I've ever been. And so,

• 32:20Speaker 02

  Dynamics, it doesn't lie. And a lot of times derivatives will whip saw price back and forth. But I think ultimately, I'm pretty confident in all time highs breaking by 2021. And at that point, it's off to the races. Bitcoin trades reflexively. You know, once all time highs are broken, or you know, essentially people just stop selling, price gets bid really hard at the margin and you're going to have a ton of new capital kind of flowing in. There's a lot of talk behind the scenes of big money, you know, buying, buying in this range. And so, you know, I think that's only going to, you know, kind of pick up from here. And I think, you know, once 60, 64K, 65K is broken, it's off to the races. And so, you know, I'm pretty confident in that occurring in 2021. And, you know, depending on how fast a rip to 100K is in the cards.

• 33:05Speaker 02

  And so, price predictions are kind of hard, but you know, supply dynamics are extremely bullish. And especially if China or, you know, the Fed broadly kind of respond to any sort of credit contagion or, you know, anything happening in the, in the legacy markets, you know, that's just rocket fuel for Bitcoin.

• 33:21Anthony Pompliano?

  And when you think about this, are you a subscriber to this like super cycle theory? That once we break the all time high, we go up, you know, hundreds of thousands of dollars? Or is it something where maybe Will is in more of the top process of like 180, 185,000 dollars? Based on some of the models he's looking at, like how severe is that reflexivity? Once we break the all time highs, in your opinion?

• 33:39Speaker 02

  Yeah, I mean, I'm a little in both camps. So, I mean, one is like, I'm just going to be looking at the data. But I think there's a, there's a real chance, and I don't know if that happens in 2022 or 2024. But at some point, Bitcoin's success is going to just be so, so obvious. And the narrative is not going to be between, you know, with us just kind of niche, you know, econ nerds or, you know, hardcore Bitcoiners, like libertarian kind of thing. I think that's even shifted recently. But it's going to be, oh my God, the legacy financial world. It's like, you know, I'm sitting on a trillion dollar bond tranche. And I'm getting, I'm getting a negative yield, right? Like these guys that are basically still locked in, they can't get Bitcoin exposure yet.

• 34:20Speaker 02

  But if an EDF comes as it just gets more mainstreamed intertwined with, you know, the legacy system, companies like Nideg and all this. You know, they're, they're going to unlock trillions and trillions. of dollars capital to access the Bitcoin markets and and the you know the most bullish aspect is that when you're looking at a liquid supply when you're just looking at the free flow of this thing that that's trading every single day. You know about fourteen fifteen million Bitcoin aren't available to be sold and like people like me like I'm not like I don't have a two thousand twenty two hundred thousand dollar price target where I'm selling my all my Bitcoin. I'm just like I might you know sell a few basis points or you know like you know obviously money is you know meant to be spent.

• 34:57Speaker 02

  But the the reality is like my price target for Bitcoin is infinity like I don't plan on I'll I'll spend Bitcoin when when uh you know it's legal tender and I don't pay taxes on it. And so like you know I think that's that's the reality here and you're gonna have tens of trillions of dollars chasing um you know a few million Bitcoin. And so you know do the math on that but ultimately um I think at some point over the next five to ten years maybe I don't I don't think it gets that far. The dollar price becomes somewhat irrelevant um as trust as trust is lost um we've just we've just pushed you know they've kicked the can so so far. Um and you know what happens next time the legacy markets crash well the feds the feds use all its ammo and it's gonna just you know it's gonna it's gonna they're gonna blow the load again and it's it's it's gonna get.

• 35:42Speaker 02

  I think it's gonna get kind of crazy so um you know super cycle not not entirely sure I think you know naturally there's gonna be boom and busts. Um fifty percent drawdowns are here to stay especially with how over indebted the the legacy system is right um you know you're gonna see these these huge cascades just because of how how much debt is in the system. Um and then how much impairment that causes with you know with with the legacy system fiat money uh money is created through lending but it's also destroyed through debt uh debt default right so. So when that happens you're gonna see just massive drawdowns in equities real estate Bitcoin like um that's just where we are in the you know in the system. And so they're gonna have to reinflate it all and that's you know that's. Bitcoin trades to seven figures.

• 36:22Anthony Pompliano?

  I tend to think that you're more right than wrong here. Before I let you go, where can we send people? What do you have? You have 45.9,000 followers. So for sure, we're going to get you to 46,000. I don't know how high we can go. We've been telling folks to go follow you here in the comments. Other than following you on Twitter, I'll put the link in the description right now. Where else do you want us to send people?

• 36:46Speaker 02

  Yeah, so you can find, I do the deep dive with Bitcoin magazine. So that's a daily newsletter. We're covering all kind of most of the stuff we've talked about. If you check that out, it's like, go to Bitcoin magazine. I think it's at the top right. It's, we got a special discount code for today's show. It's 10 bucks a month for six months, discount code POMP. So you can give it a try. I mean, I think I'm really happy with the work we put out. We put out about 20, 20 pieces a week that are pretty in-depth research. Covering kind of the, you know, more of the, like in the weeds of the on-chain and derivative market stuff. So, you know, those, those price predictions you were asking me about, you know, we're not giving straight up trading signals, but, you know, covering probabilities and various things that could happen in the market. So yeah, that's where you can find me, Twitter. I hang out a lot, you know, in my DMs if you have any questions.

• 37:32Anthony Pompliano?

  All right. So before I let you go, we're going to take a couple of questions from the, the audience real quick. So if anyone's got questions, go ahead and leave them in the, in the chat here. And John's going to pick one or two of them for us to ask. But Dylan, you obviously can't see the chat at the moment, but you have a new nickname. According to the audience, they are calling you Dylan Sailor.

• 37:52Anthony Pompliano?

  And they keep saying that you dropped your crown and they are posting the, the king crown in here. So they, I think they very much are enjoying the content. All right. So questions here, John, anything that you see that you think is good?

• 38:08Speaker 03

  One person asked earlier on the show was, are you looking at anything besides Bitcoin for investments? Real estate, like any different kind of assets?

• 38:17Speaker 02

  Or is it just Bitcoin? Yeah, so I think at this at this stage in my life, right, like being 20 years old, just trying to accumulate as much capital as possible, diversification like doesn't really make sense because I'm doing things in like basically Bitcoin denomination. So when I'm when I'm evaluating equities, like right, so I love, I think Amazon is a fantastic business, just just for example, but I don't think Amazon is worth 42 million Bitcoin or whatever, right? Like, and so just just viewing any sort of investment through that lens is is something that I I try to do. I think Amazon, you know, the NASDAQ, real estate more broadly, like whatever kind of legacy investment you're talking about, it's going to go up and it's going to go up a lot in dollar terms over the next decade.

• 39:02Speaker 02

  I'm pretty confident in that due to just the the debt dynamics. But if your baseline is dollars, you're doing great. If your baseline is Bitcoin, well, I think you're gonna you're gonna probably get killed. And so, you know, I'll buy I'll buy Amazon stock when it's when the market cap is less than, you know, 500,000 Bitcoin or whatever it is, right? Just just kind of doing things through a Bitcoin denomination is is what I do. And that's why, you know, that's what leads me to basically have, I have over 100% of my net worth in Bitcoin, you know, because of because of liabilities.

• 39:34Anthony Pompliano?

  So a couple of people are asking, what would make you bearish? Or what would make you sell Bitcoin in terms of things happening in the market?

• 39:42Speaker 02

  What would make me bearish is basically over the like over a long period of time, not something just like China, but hash rate decreasing significantly and staying I'm staying there. Whether and I don't see how that happens, but it would have to be, you know, maybe there's this another proof of work network that one, you know, doesn't have the liquidity of Bitcoin, doesn't have the network effect, all of these things, which leads me to be supremely confident that Bitcoin is already one. But if hash rate, you know, left the network to go somewhere else, then then that would really make me kind of rethink the thesis because ultimately, you know, Bitcoin is the most secure proof of work network. And because of the network effects that come off of that, the security, the immutability of the protocol, like all of these things, that

• 40:27Speaker 02

  That leaves me supremely confident in, in, you know, my holdings, my savings. And so the dollar price like, you know, if even if Bitcoin went to 15K, you know, because of the Evergrande spillover and legacy market blew up, like, I'm buying hand over fist and I'm going to go to every bank I can and try to get a loan, right? Like there's, there's, there's not, there's not a dollar volatility move that makes me sell. Uh, what makes me sell is, is some fundamental flaw in protocol that, you know, millions of people looking at this thing every day haven't found yet, but that would make me rethink my thesis. You know, no, no dollar volatility in the, in the market.

• 40:59Anthony Pompliano?

  So I'm going to ask you to clarify this because I don't think people caught this. When I asked you, uh, how much of your portfolios in Bitcoin, you said over 100%, which is not usually an answer for people here. So explain what you mean by that.

• 41:13Speaker 02

  Yeah, um, I've taken out, um, I've basically gotten my hands on any sort of, uh, credit I could in 2020, um, around April, May, uh, June timeframe. Um, a lot of like, I actually got, um, you know, not financial advice.

• 41:27Anthony Pompliano?

  Terms and conditions.

• 41:30Speaker 02

  Um, I took out like, um, I, cause I'm, you know, I was 18, 19 at the time, like I, I wasn't available to get like, you know, uh, you know, a billion dollars at zero like Michael Saylor. Uh, but I could get a lot of, I got a lot of zero percent, uh, credit cards for 18 months. So I stacked, I stacked my butt off, uh, in that timeframe. And so I still am, still am carrying that debt because honestly, again, not financial advice, but 15%, 12% APR, whatever it is, I'm pretty confident, uh, in, uh, in Bitcoin out, outperforming that. So, uh, when the benchmark is Bitcoin, uh, fiat denominated liabilities, like I have a, I have a cash flow. I work, I have a, you know, I, I get a paycheck. Like it's not something that I'm, I'm too worried about. So yeah, if you know, if you're looking at a network basis, I have, I have over a hundred percent in Bitcoin.

• 42:14Anthony Pompliano?

  You, you understand that that is insane by boomer standards and, uh, it's par for the. The course in Bitcoin world?

• 42:21Speaker 02

  Yeah, I told people that back in 2020, even today, and people, some people look at me like I have three heads. And I'm like, no, man, it's prudent. And then, and I like, they think I'm joking. I'm like, no, it's not. It's prudent for me. And so, yeah, I mean, again, not financial advice, but when you're like, why? If you're just looking at like, say, Michael Saylor, right? Or, or anybody that's taking on dollar liabilities. You know, Michael Saylor, Bitcoin has to, like, when he's borrowing 6%, 500 billion, 500 million to buy a 37K. Well, what's 6% Kager? What's Bitcoin have to be at in 2027? Like 50K maybe for him to break even? And so like, you know, obviously, everyone's situation is different, but if you can service the debt,

• 43:03Speaker 02

  if you can service this, the coupon, the interest payment, then I don't think that's, that's risky. You know, don't, don't over leverage yourself and have it all blow up because you don't want to become a forced seller. But again, yeah, when you're, when you're evaluating things with this artificial cost of capital against this monetizing digital bearer asset, you know, the math is, I think is on your side.

• 43:25Anthony Pompliano?

  Yeah, it's absolutely incredible. In some weird way, I'm proud of you. Good job. Not financial advice, but seems to be working out for you. All right. Everyone go follow Dylan on Twitter. I'll put his Twitter handle one more time in the chat. Make sure you go follow him. Hopefully, we can get him to, let's see, have we already? Oh, yeah, we already pumped you over 46,000. You're, you're well on your way. The other thing is, John, what do we think Dylan's follower count is on Twitter by the end of the year? End of the year? 100K? Ooh, more than double. Look, he's like, I'll take that. I'll take that. That's all right. John's at 50K. Are you, are you and Dylan going to raise to 100? We'll see what Bitcoin does.

• 44:07Speaker 02

  It's on.

• 44:07Anthony Pompliano?

  John, what do you have? You got 50? Yeah, I got 50. Oh, Dylan's at 46. So he's got Bitcoin behind him. John will start tweeting a lot about Bitcoin if all of a sudden it takes off. Send me some charts.

• 44:19Anthony Pompliano?

  All right, buddy. Listen, thank you so much for doing this. We appreciate it. We'll definitely do it again in the future. And, and keep going, man. You're really, you're doing a great job, and I think people really enjoyed it.

• 44:28Speaker 02

  Thanks for having me on, guys. It was a lot of fun.

• 44:30Anthony Pompliano?

  All right. See you later.